Colorado SB26-002 Frees Propane Furnaces, Water Heaters From Ultra-Low NOx Rule Until 2031

The Situation

Colorado service managers can again quote standard propane furnaces and water heaters for fall replacements. According to the Colorado General Assembly bill page, SB26-002 took effect Aug. 12, 2026. It exempts propane products and manufactured-home appliances from certain state emissions standards until Jan. 1, 2031.

The fix comes as heating season opens. LP Gas reported that compliant propane units had been vanishing from Colorado shelves after the ultra-low NOx mandate kicked in on Jan. 1, 2026.

The Facts

Colorado's original mandate, House Bill 23-1161, required new gas-fired furnaces and water heaters sold or installed in the state to meet ultra-low NOx limits modeled on California's South Coast Air Quality Management District standards, LP Gas reported. The aim was to cut ozone-forming emissions along the Front Range. Manufacturers retooled quickly for natural gas, a large national market.

Propane was a different story. LP Gas noted that propane burns differently, so compliant units need separate engineering, and they never reached the market in volume. Manufactured-home equipment hit the same wall.

LP Gas put Colorado's annual propane sales at roughly 186 million gallons, much of it going to rural and manufactured-home customers with no natural gas line.

The legislature's bill page lists Sens. Cathy Kipp and Tony Exum and Reps. Jenny Willford and Elizabeth Velasco as prime sponsors. It shows the House passing the bill May 12 and the Senate concurring May 13, then the governor's signature and an effective date of Aug. 12, 2026 (Chapter 305).

The bill's official title is Energy Affordability. Most of it sets up a percentage-of-income payment plan for low-income customers of investor-owned utilities. It also pushes an Infrastructure Investment and Jobs Act appropriation deadline from July 1, 2028, to July 1, 2031, according to the bill page.

Watch the scope wording. The bill summary says propane products and manufactured-home appliances are exempt from certain emissions standards. LP Gas describes the exemption as covering propane-fueled heating and water-heating appliances under the Colorado Department of Public Health and Environment's ultra-low NOx rules.

The Colorado Propane Gas Association lobbied for the change, and Executive Director Tom Clark called it a win for "consumer choice and energy affordability," LP Gas reported. The Southwest Energy Efficiency Project backed the original rule and helped write the amendment. It called the exemption a five-year runway for manufacturers to catch up, not a permanent carve-out, according to LP Gas.

Business Impact

The exemption brings back a normal replacement cycle heading into winter. Colorado dealers can quote standard propane furnaces and water heaters from the full model lineup again instead of hunting for compliant units that did not exist. That matters most in rural and manufactured-home territory, where customers have no fuel alternative. The runway has a firm end date, though, and supporters of the original rule have said so publicly.

What this means for your business: 1. Fall replacement quotes can use standard propane equipment again.

1. 1.Manufactured-home customers get the same relief.

1. 1.The Jan. 1, 2031 sunset gives you a planning date for future inventory and pricing.

1. 1.Dual-fuel territories need separate quoting rules, because natural gas units stay under the 2026 standard.

Key Takeaways

• Colorado propane furnaces and water heaters are exempt from the state's ultra-low NOx standards from Aug. 12, 2026, until Jan. 1, 2031.
• Appliances built for manufactured homes are covered by the same exemption.
• Natural gas furnaces and water heaters remain under the original 2026 ultra-low NOx mandate.
• The exemption is temporary, and its backers have called it a runway for manufacturers rather than a permanent carve-out.

Action Steps

1. 1.Have installers and salespeople switch Colorado propane replacement quotes back to standard furnace and water heater models this week.
2. 2.Ask your equipment distributors which standard propane and manufactured-home models they can stock for fall and early-winter jobs.
3. 3.Flag any job that pairs propane and natural gas equipment, so the natural gas unit is still quoted to the 2026 ultra-low NOx rule.
4. 4.Pull every Colorado propane customer whose furnace or water heater replacement was put on hold this year, and call them back with a standard-equipment quote.

Competitive Advantage

Dealers who reopen stalled replacement jobs first will win the fall work. Customers who were told this spring that no compliant propane unit existed are still waiting on a heater or furnace. A prompt callback with a real quote shows that your shop tracks the law and doesn't let customers sit through the cold months waiting.